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Why digital transformation should be a family (business) affair

  • The COVID-19 pandemic forced many organisations to shore up their digital capabilities in order to respond to changing consumer preferences.

  • Only 15% of Australia’s family businesses say they have strong digital capabilities in place, but almost half are focused on future improvements.

  • Family businesses are most likely to succeed when they have a clear understanding of the scale and scope of the transformation required.

Back in October 2014, PwC released a formative study into the rising tide of wearable technology in the United States. Those were heady days for the wearables industry: the Apple Watch had been announced a month earlier, fitness devices were far and away the dominant subcategory, and consumer concerns revolved around invasions of privacy and vulnerability to security breaches.

Since that first report, the wearables industry has evolved in leaps and bounds. The Apple Watch launched in April 2015, selling twice as many units in its first year compared to the first iPhone. Fitness trackers, while still the dominant tranche of wearables, began to have their commanding lead eroded by smartwatches. Probably due in no small part to the Apple Watch. Meanwhile, consumer sentiment began to shift, moving away from abstract fears about privacy or security and towards more tangible issues such as price and usability.

PwC wearable statistics report 2016 social

Devices aid social interaction

The uptake of wearables by the public has been impressive. Almost half of survey respondents owned at least one device (49%), representing a rise of 21% compared to 2014. These are encouraging numbers, but what’s particularly fascinating is how a further 36% revealed they own more than one wearable device. This indicates room for significantly more device saturation per user compared to other categories such as smartphones (it should be mentioned, however, that many respondents considered smartphones a wearable device).

While health remained a key driver for wearables adoption, one of the more surprising results of the study was the perceived role of wearables in social interaction. Despite multiple hand-wringing editorials on the topic of ‘smartwatch etiquette’ over the past 18 months, survey respondents increasingly think wearable technology will aid social interaction. From 2014 to 2016, the number of individuals saying daily use of wearable tech would increase social interaction more than tripled from 10% to 33%.

PwC wearable statistics 2016 report health

Wearable statistics show we’re finding it hard to commit

Although Wearable Life paints an overwhelmingly positive picture for adoption and changing consumer attitudes, the wearable statistics show a whole slew of challenges still befall the category. One is so-called ‘stickiness’. For a dominant 80% of survey respondents (and Millennials in particular), incentives such as money or loyalty points would be required to encourage daily use. Novelty, it seems, is not enough.

This lack of commitment carries over to current rates of usage: all device subcategories have shown significant declines over time. Daily wear of smartglasses has dropped the least (16%) while the appeal of smartclothes waned faster than all else (33% drop). Meanwhile, the more mainstream fitness and smartwatch device categories registered 18% and 22% decreases in daily wear, respectively.

While Millennials may need an extra sweetener to keep their devices strapped on, parents showed impressive signs of sustained adoption. Adults with at least one child in the household were twice as likely as non-parents to own one or more wearable device. For parents, key motivators were health (85%), technology proficiency (80%) and parenting and productivity (77% apiece).

PwC wearable statistics 2016 report parents

Wearables in Australia

For the first time, Wearable Life put the spotlight on wearable technology in other countries, including Australia. In a separate study conducted in April 2016, Australians were surveyed on their own attitudes and usage of wearable technology. The results make for an interesting comparison to our American counterparts.

Of the 500 Australians surveyed, 55% owned a wearable device, a symbolic majority compared to the 49% in the US. Of these wearable-toting Aussies, 48% sported a fitness band while 34% went for a smartwatch. These ratios are fairly consistent with the US, with 45% and 27% opting for fitness bands and smartwatches, respectively. The two nations also agreed on the barriers to buying a wearable device: price was king, followed by lack of a daily use-case or relevance, with concerns about privacy coming in last – a huge shift compared to the 2014 study’s emphasis on security.

Ultimately, the biggest difference between Australian and US consumers is in which wearable they are more likely to purchase sometime in the future. For Australians, smartwatches are a slightly more compelling prospect. The reverse is true for Americans, 4% more are looking to buy a fitness band than a smartwatch.

A wristed development

In the end, the wearable statistics show the future of each device will hang on an ability to develop a sense of indispensability among users. This will happen eventually, particularly as battery life extends, processing power increases, and operating systems are better refined to suit consumer preferences (which, until now, have been mostly unknown).

However, as it currently stands, wearable devices do not pass the all-important ‘turnaround test’ – the urge to return home to fetch it when you’ve realised you’ve forgotten it. The smartphone managed to infiltrate this exclusive club very quickly. For wearables, it may yet take a while longer.

Read the full version of PwC’s wearable technology report, The Wearable Life 2.0: Connected living in a wearable world here.

All graphics in this article reflect US survey figures.

If family business owners had lingering doubts about the impact of digital disruption, those were surely swept away last year. The pandemic prompted many businesses to try new digital tactics to reach and serve customers. Many valuable lessons were learned along the way and those with strong digital capabilities and access to good data performed better than their less equipped peers.1

PwC’s 10th Global Family Business Survey 2021 (Australian findings), examines how, and why, family businesses need to capitalise on the lessons of the past 18 months — and act now to preserve their legacy tomorrow. With further market disruption and change inevitable, it is clear they must make deeper digital transformation a strategic priority. In doing so, they will set their businesses up for lasting success.

Why transformation can’t wait

The Family Business survey found that while only 15 percent of Australia’s family businesses have strong digital capabilities, almost half (48 percent) are now focusing on major improvements. These companies are recognising the powerful combination of factors that mean deep and systemic digital transformation cannot wait:

  1. The success of any business depends upon its ability to meet demand. Now more than ever, the external market is demanding that businesses engage digitally. Consumer buying patterns are shifting, forcing family businesses to adjust. For example, those that supply goods to large supermarkets now require specific digital systems as a bare minimum. Those that can respond to demand will not only retain their existing customers, but also open themselves up to new and larger markets locally and overseas. They’re also less likely to be disrupted by new market entrants.

  2. Digital transformation allows family businesses to refine back-office operations. In the process, this allows businesses to achieve efficiencies and save money, for example, by implementing solutions for processing orders or closing the books at month-end. All such measures help keep a business lean and competitive. 

  3. Talent is an increasingly important area of focus. A growing body of evidence shows that people are increasingly making career choices based on the opportunities to upskill and keep pace with emerging technology. But Australian employers remain particularly slow at addressing this. A global study by MIT CISR found that 58 percent of Australian firms fail to provide their people with both the technologies and capabilities to work effectively in the digital world (more than double the global figure of 27 percent).2

  4. Digital transformation sets family businesses up to remain agile in the future. Business models that have survived for decades may not remain fit for purpose in the years to come. The right technology and processes allow owners to obtain real-time insights into the business, identify trends, and make informed decisions to propel their organisation forward. 

  5. Investors expect that you have, or will, go digital. Increasingly, investors are seeking businesses that have sophisticated and rigorous KPI reporting, analysis and insights. Digital transformation enables family businesses to generate accurate, quality reports that investors can rely upon to understand what KPIs are being measured, how frequently, and how management is responding. 

  6. The threat of cyber-attack. Family businesses that have not lifted their digital capabilities can be a soft and lucrative target for cyber criminals and other threat actors. Such incidents can cause significant (potentially catastrophic) operational, financial and reputational damage. On the flipside, robust cybersecurity can reduce cyber risks and send a message to the market that a business is safe and trustworthy to deal with.

Safeguarding the future

The pandemic forced Australian businesses to adopt new digital tactics to address short-term issues. About a third of family businesses (31 percent) have already developed and documented a long-term roadmap for digital transformation, and many more will soon follow suit. 

Family businesses are most likely to succeed when they have a clear understanding of the scale and scope of the transformation required.

Owners are increasingly aware that digital transformation requires more than one individual or department to take the initiative. It requires more than a patchwork of apps that solve specific problems. And it requires more than just back-office solutions for admin.

Digital transformation requires everyone and everything to adapt, so that the business can keep up with the exponential evolution of technology. Proactive owners are challenging their own mindsets and starting to see IT or ICT as more than a sunk cost that makes the business work more efficiently. 

Genuine digital transformation will change the working life of everybody from the boardroom to the mailroom. Often, it reinvents a business’s entire IT systems, to provide insights that give owners the confidence to change the way things have always been done and unearth new ways to generate more value and revenue. 

Time and cost barriers can be overcome

Of course, digital transformation requires financial investment – but the good news is that the costs have dropped dramatically in recent years. Some of the analytics tools that multinationals were spending millions of dollars developing a decade ago are now available as standard software-as-a-service (SaaS) tools with equivalent capability for a fraction of the cost. 

Cloud and server technology also costs a fraction of what it once did. So it’s relatively inexpensive to implement Enterprise Resource Planning (ERP) systems that connect every part of a family business. The results can be a ‘win’ for everyone:

  • Owners gain a more comprehensive view of how their business is operating.

  • Staff encounter fewer obstacles and require less workarounds, which boosts morale and productivity.

  • Suppliers get a clearer idea of future demand and lead times.

  • Customers enjoy a much more seamless and satisfying experience. 

Digital transformation also requires an investment of time but that’s not a commodity that most family business owners are blessed with. Understandably, their focus is often on ensuring the business continues to grow. So, it’s important to generate capacity within the business (either internally or through consultants) who will dedicate themselves to delivering the transformation at speed – with minimal disruption to day-to-day operations.

The time to act is now

The challenges of the last year have required significant resilience to survive. The rapidly changing state of the world has served as a wake-up call for all business leaders looking towards the future, and family businesses are no exception.

It’s no longer enough to rely on values and legacy to propel the business forward. Tomorrow’s family business requires a new approach for lasting success — one firmly supported by a robust digital transformation.

Explore the data from PwC’s 10th Global Family Business Survey 2021 or download the key Australian findings.

References

  1. PwC client work.
  2. https://cisr.mit.edu/publication/2020_0601a_AUSPathways_WeillDeryWoerner

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